Kyota. Welcome to Shared Lunch, brought to you by Sarsy's. My name is Dan Brunskill. Today on Shared Lunch, we're joined by Damien Spring, CEO of Santana Minerals, to talk about their new listing on the Inside X, the new gold mine near Queenstown, and the government's fast tracked legislation and more. But before we get started, here's some important information.
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Damien, thank you for coming on the show.
Glad to be here.
Busy week for you. Absolutely did you you just newly listed on the Inside X So did you get to ring the bell?
Absolutely? Yeah.
Well, actually, our founding director of Matakanai Gold and his ZEEM subsidiary Combunting, got that privilege. Here's the guy who drove the discovery, so he rang it first and then the whole team got their hands on there.
I wanted to I wanted to ask you about the discoveries because because they have interesting names. I think the one we're talking about is called Raise and Shine. Another one's called common Time, and there's Shrek and Shrek East, which I don't know why it wasn't Shrek too, my personal favorite. But where do you cut with his names?
Well, the first two historic names, they're from the eighteen sixties through the nineteen twenties though mind so yeah, Rise and Shine just good old prospectors' names from that era. And I guess Shrek's is acknowledgment of the big wooly sheep that was found twenty years ago this year.
Got it is that from the same region.
From Benego Station, were one of half the land that were lyon has been to go and the other half out here.
Are you still looking for new discoveries?
Absolutely, it's a very prospective area and continue to explore.
Tell us what is this discovery, what have you found? Why are you excited about it?
Look, it's a half million ounces at a grade of two point one grands per ton or parts per million.
It's on the.
World scale, that is right up there. There's not many other undeveloped new discoveries of that order in the world right now. And it's we're really excited about it. You know, I was working in the area or living in the area really, and when the opportunity came on board came up, I knew about the project and took the opportunity with both ham.
So how long have you been looking at this? You said it's a sort of historical gold gold area.
Yeah, well that's how we find things, look where the old timers were. But really the discovery hole was made in twenty twenty one, where after prospecting in the valley's Sentana Mineral bought the project off. Metacnoy Gold funded seven million dollars of expiration and James Bond whole Double O seven drilled forty meters at two grands per ton. So they followed it up with obviously a lot more drilling.
We've drawed over three hundred holes now across the project and it's just turned into a world class deposit.
So Double A seven the seventh hole you dug, correct, hit gold. Yes, that's good. That's good, okay, And the technical terms about how how much gold there is in the ground may be lost on me and listeners, but it's a.
Good oh, absolutely, And I guess the reason we put out our scoping study earliest earlier this year was to actually put some more palatable metrics around it, in particularly on the financial side of things. So yeah, it's a
fantastic project. It's going to deliver four point four billion dollars over ten years on what we know at that point in time was half the resource, and deliver potentially six percent of that value in the ground to New Zealanders either through taxes, royalties or dividends to our current existing forty percent New Zealand based shareholders. But we hope to grow with our recent listening yesterday, of.
Course, congratulate. Talk to me about that because you're an Australian registered company ASX listed. You know, people on cheersa's and professional traders can buy and sell on the AX. What made you want to come over to the inzid X and set up a secondary listing here? What's the what's the benefit of doing so?
Oh, look at it.
It's demonstrating our intent, you know it as a New Zealand discovery. It will be developed in mind predominantly by New Zealanders for themselves and for their families and the community. I guess in terms of why specifically on the inziet X. It is a given the ability for those investors, whether retail or institutional, to trade in New Zealand currency without
worrying about that forts issue. And ultimately, when we do start declaring dividends that hopefully we can do it in New Zealand dollars and get whatever franking credits are available at that point in time.
You said about forty percent of your register on New Zealanders. Do you expect that to change and shift and grow potentially?
Oh, look at there is that expectation. Ultimately, it gives us two platforms in which to grow the company here in New Zealand. Then of course the A six and we'll be looking for a final investment decision sometime next year, which will also be looking to capital raise to build the mine.
Of course, how much do you think you will need to raise?
Scope and study indicated about two and fifty million dollars in New Zealand and we're looking at a number of options as you expect, over a coming months to see how we're going to raise that money.
And when you see options, you mean maybe a mix of reason capital.
Debt, debt and equity predominant.
Yes, have you taken on any sort of obviously on the sheer markets, you investors can come along. Have you taken on any big institutional investors for this project or it's been.
Through them attacking of gold. They were well backed originally by High Networks in New Zealand never remained loyal to the company through the Santana acquiring a Takenery Gold. So right now, in terms of the A six, we really only have one institutional investor that's Regal They're number one, and the rest are helped still held bi predominantly by High Networks. So look as we definitely move into that construction phase, we expect that institutional buying will be there.
So it sounds like Santana is quite focused on New Zealand and this project in particular. Do you have other projects going on? Is this one of many minds? What else does do you do?
No, So, Santana is essentially an expiration company now looking to be a development company and ultimately a gold producer. So yes, we do have a couple of projects, one in Mexico that we're divesting and also a one in Cambodia which we're just earning. Have a partner there who's earning an interest in that doing all the work, so we'll just sit there quietly and let them do the work and hopefully grow that project on its own right.
But so yeah, we're really focused on the bend to go over goal project that toownnumber one focus.
So you've previously been exploration. Is this your first foray into actually pulling the gold out of.
The ground In terms of the company, Santana absolutely, but it was spun out of a previous deal about ten years ago in Mexico, so the assets that were not required for that transaction were put into Santana. And as the way of our industry, you know, we have these junior explorers who are out there looking at the ground first on the ground to see if they can make a discovery, and ultimately, if they do make a discovery, transition to a developer or get picked up by existing producer.
So I guess really as a company we're new, but as a team, as a people, we're very experienced. Peter Cook our non executive chairman, he's a very successful builder of minds and mining companies and one of note was west Gold. There's now well in excess of a billion dollars market cap, and a number of others in my team that I've selected over the last six months to
be on the ground down there. I've all got their extensive careers in mining, both in Australia and New Zealand, and particularly with their own experiences in New Zealand, they've already got that in New Zealand context.
Co goo back to something you said earlier. You said the way to find gold is look where the old time has looked. What has changed between now and then, I'm guessing it's technological advance that means you can get the goal that they maybe knew was there but didn't pull up.
Well, there's a couple of things. Is the grade. You know, they are mining thirty grams per ton as a moniment that outstir it, as we call it. So we're mining potentially two and a half, probably a little bit higher initially, maybe up to five grands.
It's how much gold is in each bit of dirt.
Yeah, very much of the rock that actually contains the goal. There's a lot of rock that we have to move to expose that rock, and then we process it.
So there's a.
Grade, and then there's knowledge and science that's developed over the one hundred and fifty years and then probably longer actually, But the point now that we really understart to understand the little bit of clues that the ground gives us. And of course we've got the experience of McCrae's mccray's gold mine near Dunedin, owned by Oceana Gold. They've been operating for now thirty four years and produce over five million ounces. Very similar geometry and geology, slight differences in
grade and metallurgy to our advantage. But there's a lot of learnings and that one of them was that had these northerly trends on their deposits which helped drive that discovery whole double seven.
So that gives you some confidence about what you found in tap.
Absolutely. Yeah, that's our bread and butter.
Your pitch to investors say this project could produce between your one point one million of ounces of gold and that could mean one point one billion to two billion dollars of net profits over ten years. But a lot of that depends on the gold price. Talk to me about the outlook for the gold price. How do you think about that, because it's quite high at the.
Moment right it is quite high ourscoping study was actually done on a conservative long term goal price of sixteen fifty US or twenty seven hundred. Key, we even on that metric produce that, as you say, one billion dollars net profit after tax. But going forward, yes, we're definitely at record pricing right now for gold. It obviously has a gold mine. It's pleasing to see and definitely drives a lot of interest. Where it ends up is beyond
our control. Definitely say that because it's an international commodity that's well traded. What we have to do is we get our project up, get our capital, get our project up, manage our bottom line, our costs, and ensure that there is a margin there. And look at almost two and a half thousand dollars key, we announce there's plenty of margin.
And yeah, got goal process tend to Yeah, what is the lowest it can go before you have to pull the plug on the project? Do you have do you have a goal price in your head that if it gets to that you're in trouble.
Oh, look it's well below two thousand, seven hundred. See that was a conservative pricing and we still made a profit.
What is it now?
Through thirty nine I think it was.
Over four thousand week back over over that price. So it's I guess it's it's a commodity that is complex, it's well traded. It goes up when it goes up, and it goes down when it goes down. And you can pick the drivers for that, I guess right now at central bank buying, but also a little bit uncertainty and international geopolitical scene as well as financials. But we'll take whatever the price is at the time we start producing, and that's what it will be.
So you've scoped the project at a price of two thousand, seven hundred US, so it's profitable at seven thousand, two thousand, seven.
Hundred absolutely one billion dollars.
Okay, that's the one billion, and then the two billion dollars is at the current price at.
Three nine hundred actuals. Is spot back in April when we release that report.
Very interesting in terms of what drives the price. You just referenced central bank buying there, What about just things like in tech components and jewelry and what would call it practical uses? Is z drove the price much? Is it all about the store of value?
Oh?
Look, no doubt, I'm not much of a student on that goal, pricing on the mining engineer by trade, but absolutely I think the technological applications are a big part of it. I think, you know, there's a little bit of gold and everybody's smartphone a very small amount, I think, less than ten bucks, but it is something. I don't know how many smartphones are in the world, but I think there was a lot.
A respect tore the not the gold experting. We ask one more question because as a retail investor show, and that is gold suddenly has a competitor in being store of value bitcoin, which people love and call it digital gold. How do you think about that? Are you worried that that, you know, bitcoin is going to displace gold?
Not really really, I don't know much about cryptocurrencies. I think people like the idea of a physical store of wealth, and of course it does create its own physical industry. You know, we're going to have two hundred and fifty direct jobs at our operation down in Central Otaga. That will spawn at least three other jobs through free full time jobs, so be close to a thousand new jobs
in the Central Otago region. So that's I guess widespread real economic driving activity versus yes, sorry crypto again, don't know anything about it.
Don't want to pick a fight today. I guess one's one's one's one has a longer history. I suppose it's exactly.
I love Millennia long. Hey.
You mentioned earlier that the people working on this Maine will be New Zealanders. I've also heard that our workforce is limited there and people who have been involved in mining have gone overseas. Present me that many projects talk to me about the workforce as available, and where do you think it will come from.
Look, there's three Q areas.
I think our workforce will come from there. They'll be like me, They've been there a long time. They've chosen to live in central Otago maintain their links to the industry. I was lucky enough to work predominantly remote. How a cell phone had international airport. It's I can jump on the plane or drive drive to any of my client's mines. There'll be others who are fly and fly out for actually going to operate at mines rather than work remote
out of that area. There'll be Kiwis and others who are working fly and fly out in Western Australia enjoying the money. But two weeks or one week away from their family for three weeks puts a toll on things. So they may be looking to change their lifestyle, staying the game that they love being a part of, and
look to relocate. And of course there'll be people want to get a bit of this new industry called gold mining in Central Otago who again are already there and just want to change jobs and join us.
So you could imagine some of the Kiwis who are mining in Australia coming back to work on a new Zealand project.
Aolutely.
I know people are who are aware of this project and aware of their mates already in the industry over there. To the text them say when you're coming back.
Your mind is not yet consented, correct, And you're hoping to be part of this new government fast tracked legislation that could speed up that whole process. It's currently making its way through parliament. Do you expect to be one of the projects that is listed in the Schedule A Schedule B that is automatically included in the legislation.
Look, we have applied for a Schedule two A. We haven't made a much deal about it because, as you say, the bill is still going through Parliament. It's actually at the Environment Select Committee stage and they're due to report back in a few months time. On the back of that, the second reading, the bill will have it second reading in Parliament and we'll hopefully see what happens with that Scheduled two A or Schedule two B.
Right, the bill's relatively controversial, one of the most controversial things the government's doing at the moment. Do you have a backup plan for if it doesn't make it or if it gets ubstantially changed.
Well, Fast Track Approval Bill is actually my Plan B, my Plan AA, given my background working for another ASX company that is one hundred percent New Zealand Bathist Resources, was to follow the Resource Management Act and submit our
applications at the end of this year. So we've been working since I've joined the company that started last year to gather the information, particularly around the environmental baseline overlay that with our mining plans, come up with a mitigation or offseting conversations allowed for under the RMA, and put the application at the end of this year. So look, this Plan B that I've called it, the Fast Track Approvals Bill as popped up, would certainly take full advantage
of it. As you know, it's an over arching piece
of legislation, palls and six acts, including the ROMA. The requirements under those individual six acts I think of which four we need permissions from those requirements still stand, so we still have to follow the processes under the ROMA to mitigate our effects and continue consultation, which is a big part of what we do, talking to our community, talking to our neighbors, talking to Manifenoa, and we expect that when we do put our application at the end
of this year or early next year, that we've done it with the best of our ability at that point in time.
So am I understanding there that the application you're submitting and the requirements you will face are the same under each process, just ones faster.
Yeah, I guess Fast Track Approvals Bill is really a one stop shop. You know, it's those six acts. We put one application to cover all the permissions under those six acts, four of the six acts that we need those permissions. As we understand it, with the current version, the expert Panel have six months to make a recommendation to the Minister and then the Minister has that decision to grant or otherwise those conditions.
So what's the timeline under Plan A.
Oh, look at part of our submission to the Environment Select Committee was that the the Plan A through the normal RMA process, that's what we call a two step process. We put your application, it all your consultation, put your application in publicly notified. Sometime months after that, you get a public hearing, lots of public anyone in the public can make a submission on it. The commissioners reveal the evidence and then confirm or otherwise the conditions of the
consent or decline it for whatever reason. Then because of the way it works for the last eighty years of the Act thirty three years of the Act is there's options to go to the Environment Court to appeal aspects where we all start again.
So that does.
Push the timeline out and I guess it is a rest for us. You know, we can't we don't want to be sitting around fighting things out in court where my goal always do a very good job on the science first, and then the consultation, understanding people's issues and at least giving them the opportunity to review our science and our mitigation before we that application.
The Resources Minister Shane Jones has said that one of the big poems mining industry faces in New Zealand is social license, this idea that maybe the New Zealand public doesn't trust you necessarily. How do you go about winning the trust of New Zealanders to say we can be trusted with this piece of the environment, we'll look after it, will look after our neighbors can convince us.
The idea of social license probably decades old. I've been aware of it for a long time. I've heard it being described in the Patagonia, where I've also worked for a T six listed company that we had to make it very clear, it's not a piece of paper that we get, here's our social license. It is a case of talking to people, introducing yourself if you ever met them before, let them know the background. And certainly in my case, I'm a local. I've lived in theretown twenty years.
So the projects are now depending on with bad traffic up to the project. So we're here for the long term. We're not an overseas company here to take the profit. Mind take the profits and disappear again. So it's about ensuring we're firing following the leader of the law at Urma.
As it stands today, and then whatever it is under the Fast Track Approval S Bill, that we're doing our work to the highest possible standard in terms of mining on the international scene, not just in New Zealand, and that we listen as best as we can and take on as best as we can those concerns for our proposal, but also highlight the benefits of our project, you know, the jobs creation, the service industry that we've built up.
And what we call.
The continued sustainable economic development of Otago and particular that started in eighteen sixty with the discovery of gold.
Well, what are the environmental impacts of the project? Obviously you dig a big hole in the ground, what else happens?
I love the main concerns. I think around water, a little bit of dust, traffic, you know, it's probably quite low, low population area, and you know, flora and fauna. So those all things that we've spent a couple of million dollars already understanding what's out there. You know, when a project of our scale comes into an area that's already sort of well known, we actually take the level of
scientific understanding a couple of waters of magnitude up. You know, we've had I had one day this year where I called it the peak ecologist Day. We had about a dozen people on site and we've only got a dozen employees. A dozen ecologists on site looking at invertebrates, lizards, tatamea, pests, all sorts of things to really get a handle on what's out there. So look, it's it's one of our key things to get this project going.
The actual place you're mining is farmland, correct, Yeah, so presumably not too many lizards.
Look at the whole of a target's got lizards and it's well known. So look, it is cheap beef country. It's a hell country. It's not flats. So yeah, look it's I don't want to say it's degraded.
It is what it is.
You know, whatever remnants of the original native ecology are there. That's one of the things we've focused on trying and understand that. Also, you know, the grasses and the other introduced species into the land. We expect that part of our application under the RMA and Fast Train Bill will be to demonstrate a no net loss to the environment and potentially a net game so pest control eliminating a lot of pests over a large hundreds of hectares of land.
It will be a big plus and as well trying to preserve what we do find there.
How supportive for this project is having a government that is taking a more pro mining stance than it has previously.
I think it's positive.
I think it's the world we live in, mining in everything we have, even either growing or mine, nothing in between, all right. So I think one of the moments for me this year with the turnaround in mining was a debate I watched on Parliamentary TV between five I think of the six major parties in Parliament debating the merits or otherwise of mining. And that's something I would not
have seen even a year ago. So the fact that the three leaders of the coalition party were debating it and a couple of the opposition parties we're debating it either for or against or neutral was a positive thing.
With the government. They're the ones who get to decide what goes in that schedule too. A you're talking about you have you met with them and made your case.
Oh, look at the processes. It's pretty remote. You fill out a form and it goes online and they need to do what they need to do to come back through official channels to us follow up questions. So that's that process where it sits with the people who run that process. Other than that, years we've had mister Jones on site to show him, give him a sense of Hey, this is what we're about and this is the scene, the area we're in, so he's got a physical experience
of what we're proposing rather something that's esoteric. And of course we've hosted him in Perth. To my directors, including our chair live in Perth, so he was hosted there to understand the Australian mining scene, including a meeting with the current or former Consulate for Western Australia.
And you were planning this project obviously long before the new government came in, so you obviously thought it was possible.
Yeah.
Look, being local, I understood the potential change in the political scene, but I didn't highlight that to the boards. You know at the time there was two Kiwis on the board anyway, So I was quite prepared to continue with the RMA under the previous government. I think this projects of such national significance that it you need to bring real primary export dollars that with the post COVID economy,
that we've been left with that. It was a real chance of being part of that, even the previous government's ticket to getting back in the black.
You said that you'll need to raise capital to do the development. I think you said two and fifty million, and you sort of looking at one to two billion dollars of net profit over the next ten years. What year would the development turn cash flow positive if everything goes to plan.
So based on our scalping study, that's all those numbers you've quoted, and we've got a pre feasibility coming out towards the end of the year that'll update all date and hopefully grow the size of the project somewhat. But in short, the answer is one year after we start pouring gold, we've paid back all our.
Capital, okay, and one year after you start pulling gold. It would be what year? And I guess it depends when you get the consent.
Well, that's true.
So on terms of actual calendar timelines, if we put our application and early next year after our PFS, the panel's got six months to make that recommendation, so we expect about this time next year we'll have that decision. We would have done our financing ready to push the button, so we could have buckets in the ground before the end of twenty twenty five, probably third quarter twenty twenty five, and just to be clear, that'll be just small works, just to set up the scene so that we can
control our water discharge if it happens to rain. It's a very dry area, set up our rating before we get start things in anger. That's a timeline of probably at least a year, meaning that potentially end of twenty twenty six could be poor in gold. But that's detail that will come out in the PFSK cool.
What are the risks facing this project? You know, what keeps you up at night? That timeline looks nice, looks good. What's your kind of what's your kind of What are the risks that investors and you should be thinking about?
Risk?
Yeah, everything's a risk in mining, and we're managing that every day, either financial, geological, mining, community relations, it's every day. So we're just going to make sure my people are well resourced, they're confident if they need something, that they get it, and that we respond to community concerns or anybody's concerns.
So I guess in my mad I can sort of think of two fairly large risks. One would be cost blowouts. We've seen a lot of that over the past few years. Even if the goal prices ses where it is, what's the chances that the cost of pulling out the ground just ends up being more than you expect.
It's record goal prices in terms of cost escalation. We've seen those costs come plateau out across most industries, but particularly in the mining industry. That's definitely happened. I guess Along those lines are obviously the workforce where they're going to come from. It's still a bit of an unknown, but again a fantastic project. It's going to attract the best and a fantastic place to live. I think these are all positives that some of those risks mitigated.
So we talked about the environmental effects. There's also a community surrounding this area, local EWE people who just live there. What do they think of the mind going in next door? What consultation have you had with them?
Look in terms of EWE, we've been in contact with them since it was an expiration project. Only since I joined. We've been very exhaustive in our contact, particularly through their consultancy arm for the RMA al Cajenen based in Dunedin to bring them up to speed that we've found something and it's definitely worth putting a bit of effort in here. So we have regular catch ups with that group. We have other touch points with Mana Finowa throughout the down South.
In terms of the community. We've been active with the local Business South Chamber of Commerce even hosted eighty people in Cromwell last night to really allow them a chance to understand what the project is and what it means for them as both individuals, for their families but also for their businesses with that obviously commercial bent to it.
And then there's the more general groups. The society is the rotoract of the lions to just let them know because they are all people who have best key to understand what that means to them and obviously to the environment.
But of course there's now the people who will be directly affected by the project, whether it's through that the traffic that will access up into the mountains, or the thoughts about the water, where it's going to come on, what are we going to do with it, where is it going to go, how we're going to control our effects on the land. Those conversations are started, and as I said, we've got a lot more work to do, and ultimately we'll try and be as transparent as we
can be. We've also got a certain amount of disclosure rules under the ASEX we have to be mindful of. But I hope to have up a website in the coming month or so that the public can access and understand, Hey, what are they doing for water monitoring? While there's the results, they can click on and see the results and see the certificates from the labs that have done the results.
And you talked about engaging with monofena. What sort of things are they interested in? What are they worried about?
I guess the flora and fauna tatami is somewhat prevalent at high altitudes. Not directly we're proposing our mind, but there they wanted to see. They protected water, you know why. It's very important as we know, and it's important to everyone right I drinking it.
And of course it is a known.
Pathway from the coastal communities into the Klutha or the mata al for in times, path particularly for food gathering and pathways so west coast for partonami. So those are all factors from an environment and historical point of view. But of course you know this is the opportunity for take part in mining. You know, demographically they make up a large proportion of kiwis in the mining industry or disproportionate. You know, they're sort of percent of workers in Australia.
I've picked with a lot of keywiks over there, and so they want, as Nissa Jones says, they want their sons and daughters and nephews and nieces come back home and dig up New Zealand rather than Calgoley. So definitely jobs, sustainable jobs, sustainable housing and building communities for their people, just like everyone else who wants the same thing.
Hey, thanks for coming in, appreciate your time. Congratulations on the INSIDEX listing. I hope things go well.
Thank you very much. Glad to be here. It's very exciting day and looking forward to the future.
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MHM.